Brazil vs. World: Starting a business

According to Forbes’ Ricardo Geromel, in Brazil it takes up to 120 days to start a business and around 4 years to close it down mainly due to high levels of bureaucracy.

“By contrast, in the US, it takes only 6 days. Yes, you read it correctly, it takes 20 times longer in Brazil! While in China it costs about US$155 to open a company and in Colombia US$670, in Brazil it costs US$1,125. In Canada and in New Zealnd, only one document is asked to open a new business. By comparison, in Brazil there are 15 mandatory legal procedures to be fulfilled.

There are some local laws in Brazil’s bureaucratic jungle that are not easily understood by foreigners. As TechCrunch quoted Fabrice Grinda, French angel investor:

In Brazil, it’s a different story. Logistics and payments work there, but it’s a dangerously litigious country, so startups often find themselves getting sued to oblivion. Grinda shared a story with the audience about a local e-commerce company that had its domain name taken away by some Brazilian judge, effectively killing its business overnight.

The most common hidden cost in Brazil is corruption.

But its bureaucracy is a culture heritage and is a tough nut to crack. And The Economist (and the whole planet Earth) agrees:

According to the World Bank’s “Doing Business” report, medium-sized Brazilian firms spend 2,600 hours a year paying taxes—over twice as long as the next-slowest country and nearly ten times the average. Such rankings have encouraged many countries to cut red tape. In Brazil, however, a loose federal structure and a constitution packed with fine regulatory detail obstruct reforms. Harmonising interstate taxes would require all state governors to agree: Luiz Inácio Lula da Silva, president from 2003 to 2010, tried and failed.